Nasdaq to Delist SCO Sep 27 269
symbolset writes "The Nasdaq Staff has decided to delist SCO at open of business on September 27, 2007 under their discretionary authority and as a result of SCO filing for Chapter 11 bankruptcy protection. SCO can get a hearing but "There can be no assurance that the panel will grant the Company's request for continued listing.""
Good time for raises, too! (Score:5, Informative)
From their Form 8-K filing [yahoo.com]:
Why yes, yes, this seems like a splendid time to start giving out raises.
I'm pretty ignorant of finance and law, but is there any reason whatsoever for the stockholders not to sue the board into destitution at this point?
Snowed By SCO (Score:5, Informative)
http://www.forbes.com/2007/09/19/software-linux-lawsuits-tech-oped-cx_dl_0919lyons.html [forbes.com]
Daniel Lyons has some choice quotes
"I reported what they said. Turns out I was getting played. They never produced a smoking gun."
and
"It is simply this: I got it wrong. The nerds got it right."
Not often you find a journalist reporting on their failure of foresight. Daniel gained a few points in my book.
It is to laugh (Score:4, Informative)
I have to laugh every time I see this line in their press releases. Even before their ill-advised journey in to the legal system, and back in their prime and heyday and earlier incarnations, SCO was never the leading provider of a damned thing.
What would make this story complete would be if SCO's remaining share holders were to file suit against its officers and directors.
Now, if you'll excuse me, I'm going to get ready to listen to the Fat Lady sing
Re:Good time for raises, too! (Score:5, Informative)
Common in Bankruptcy (Score:3, Informative)
Re:What happens? (Score:3, Informative)
Er, assuming you can find someone to buy from. I think there are more shorts than holders.
Re:What happens? (Score:5, Informative)
I'm guessing you know about covering dividends, one-time special payments, and the like to the long holder. Short selling is fraught with danger, but boy can't it be handy?
Re:This is really bad news for me. (Score:5, Informative)
If you sell stock you don't own you HAVE to buy it back OR make good the monetary difference at some point in the future.
So let's say you "short" 100 shares of SCO when it is at $10 a share (yeah right). Your broker deposits $1000 in your account and records your sale. He may or may not have to adjust his own share inventory at this point, but as far as you are concerned you just "made" $1000.
Now if the price goes up, say to $15 per share, it would cost you $1500 to buy those 100 shares back. If you have plenty of money in your investment account your broker will just let it slide. But if you run out of credit (ie you don't have more than $1500), your broker will oblige you to buy back the stock, since he no longer has any assurance that you will be able to pay if the stock keeps going up. This is how you get screwed with short sales.
On the other hand, if the stock goes DOWN, say to $5 a share, then you are laughing, because once you decide to "cash in" on your investment, you "buy back" the 100 shares you sold at the current price of $500 ($5 per share). That means you pay $500 out of your account. But remember that your broker has already put $1000 in your account from the short sale you made earlier. So you've earned the balance - $1000 you were given for "selling" the stock short, less $500 to "buy back" the stock and close your commitment with your broker leaves you a profit of $500.
This is a bit off-topic but I felt like writing. Hopefully you understand "short" selling now. Just remember that ALL stocks tend to RISE in value over time (unless there's something REALLY wrong with the company/sector/economy). It's not easy to make money by selling short, but when you spot a stock that is ridiculously overvalued, well, what goes up must also come down at some point. Judging when to buy and when to sell is what makes the difference between people who lose on Wall St. and people who win. And remember, if it was easy, everyone would be rich.
Re:What happens? (Score:4, Informative)
If he's shorted the stock, he needs to find someone willing to sell him stock, not willing to buy his stock. If it goes to zero that's the best possible case, as he gets to keep his money without having to return the stock at all.
Shorting stock is essentially selling shares you don't have and so you owe them to someone else (e.g. your broker). You do this in the expectation that the price will go down, whereby you can cover your debt of shares by buying the shares at a lower price than you sold them for, profitting on the difference).
It *sort* of works likes this:
You have 0$
You make a deal to 'borrow' 1000 shares valued at $1, which you'll have to return at some point. You immediately sell those shares for $1000, putting $1000 in your pocket. The shares have now been 'shorted'. You have $1000, you owe your broker 1000 shares.
Two weeks later the price is 0.50 cents, you buy 1000 shares for $500.
Now you have 1000 shares and $500, and you owe your broker 1000 shares.
You return the 1000 shares.
You now have $500 in your pocket, that you didn't have before, and no debt.
Of course its more complex than this, there are transaction fees, interest charges, and if the stock goes up and your account crosses a particular threshold the broker can force you to buy the shares at the current higher market price to cover the shorted shores. (ie 'foreclose' on your loan).
Shorting is inherently riskier than going long (buying and holding and selling) because when long the worst that can happen is the stock can go to zero and you lose it all, and the best that can happen is that the stock will increase many times over.
With shorting you can lose your investment many times over as there is no limit to how high the stock goes, and at most can only gain 100% of the transaction value, should the stock become worthless.
In the example above, if the stock were to spike to $5 and your broker called you, you'd have to pay $5000 to return the shares you borrowed, putting you deep in the whole.
----
Anyhow the OP was wondering, where exectly he could buy those shares he owes, if it gets delisted. And via OTC pink slips is where the action will be.
Being delisted doesn't mean SCO shares can't be traded, merely that they can't be traded on the exchange. Getting delisted tends to push the price even further down, because shares traded OTC are less liquid, therefore less desirable, therefore worth less. Of course, that's just more good news for the OP.
Having your trading halted on the other hand, means just that. No trading.
Re:hmm (Score:5, Informative)
Not sure about it's source, but here's one a lot of people reference: http://theforrester.wordpress.com/2007/08/13/the-100-oldest-domains-on-the-internet/ [wordpress.com]. Here's the list for the click-impaired:
(Note that here SCO is listed at #88. Domains registered on the same day are presented in random order so SCO.COM may indeed be 86. Also, sorry for the stupid formatting, bloody lameness filter).
1. 15-Mar-1985 SYMBOLICS.COM
2. 24-Apr-1985 BBN.COM
3. 24-May-1985 THINK.COM
4. 11-Jul-1985 MCC.COM
5. 30-Sep-1985 DEC.COM
6. 07-Nov-1985 NORTHROP.COM
7. 09-Jan-1986 XEROX.COM
8. 17-Jan-1986 SRI.COM
9. 03-Mar-1986 HP.COM
10. 05-Mar-1986 BELLCORE.COM
11. 19-Mar-1986 IBM.COM
12. 19-Mar-1986 SUN.COM
13. 25-Mar-1986 INTEL.COM
14. 25-Mar-1986 TI.COM
15. 25-Apr-1986 ATT.COM
16. 08-May-1986 GMR.COM
17. 08-May-1986 TEK.COM
18. 10-Jul-1986 FMC.COM
19. 10-Jul-1986 UB.COM
20. 05-Aug-1986 BELL-ATL.COM
21. 05-Aug-1986 GE.COM
22. 05-Aug-1986 GREBYN.COM
23. 05-Aug-1986 ISC.COM
24. 05-Aug-1986 NSC.COM
25. 05-Aug-1986 STARGATE.COM
26. 02-Sep-1986 BOEING.COM
27. 18-Sep-1986 ITCORP.COM
28. 29-Sep-1986 SIEMENS.COM
29. 18-Oct-1986 PYRAMID.COM
30. 27-Oct-1986 ALPHACDC.COM
31. 27-Oct-1986 BDM.COM
32. 27-Oct-1986 FLUKE.COM
33. 27-Oct-1986 INMET.COM
34. 27-Oct-1986 KESMAI.COM
35. 7-Oct-1986 MENTOR.COM
36. 7-Oct-1986 NEC.COM
37. 27-Oct-1986 RAY.COM
38. 27-Oct-1986 ROSEMOUNT.COM
39. 27-Oct-1986 VORTEX.COM
40. 05-Nov-1986 ALCOA.COM
41. 05-Nov-1986 GTE.COM
42. 17-Nov-1986 ADOBE.COM
43. 17-Nov-1986 AMD.COM
44. 17-Nov-1986 DAS.COM
45. 17-Nov-1986 DATA-IO.COM
46. 17-Nov-1986 OCTOPUS.COM
47. 17-Nov-1986 PORTAL.COM
48. 17-Nov-1986 TELTONE.COM
49. 11-Dec-1986 3COM.COM
50. 11-Dec-1986 AMDAHL.COM
51. 11-Dec-1986 CCUR.COM
52. 11-Dec-1986 CI.COM
53. 11-Dec-1986 CONVERGENT.COM
54. 11-Dec-1986 DG.COM
55. 11-Dec-1986 PEREGRINE.COM
56. 11-Dec-1986 QUAD.COM
57. 11-Dec-1986 SQ.COM
58. 11-Dec-1986 TANDY.COM
59. 11-Dec-1986 TTI.COM
60. 11-Dec-1986 UNISYS.COM
61. 19-Jan-1987 CGI.COM
62. 19-Jan-1987 CTS.COM
63. 19-Jan-1987 SPDCC.COM
64. 19-Feb-1987 APPLE.COM
65. 04-Mar-1987 NMA.COM
66. 04-Mar-1987 PRIME.COM
67. 04-Apr-1987 PHILIPS.COM
68. 23-Apr-1987 DATACUBE.COM
69. 23-Apr-1987 KAI.COM
Re:Unimpressed by his apology; he doesn't get it (Score:4, Informative)
I've had a couple of short email conversations with Dan (not of any consequence, just something along the lines of resisting the urge to be a mouthpiece for SCO) and in his one reply he exhibited the same hubris as he does in this excuse for an apology.
See, it wasn't really him: SCO snowed him, he gave them the benefit of the doubt, and after all what's a journalist who follows a case for 4 years meant to do except take them at their word - continually. God forbid that he should pay any attention to a bunch of 'nerds' who happened to luck out - who woulda thunk it?.
And see, he is only publishing his 'mea culpa' out of his own supreme sense of integrity - "Online publications don't typically ask for follow-throughs. But I need to write one." - wow, what a guy! And don't forget, "Over time my SCO articles began to carry headlines like, "Dumb and Dumber," "Bumbling Bully" and "SCO gets TKO'd.". See, I really was doing my due diligence and actively seeking fact, wading through SCO's bullshit! He wasn't falling for SCO's brand of the truth!
And anyway, those nasty nerdy types in "that highly partisan crowd have suggested that I wanted SCO to win, and even that I was paid off by SCO or Microsoft. Of course that's not true. I've told these folks it's not true. Hasn't stopped them". Poor Dan is non-plussed by such callousness! How can we not but believe all Dan tells us?
Sorry Dan, that is the piss-poorest excuse for a mea culpa in recorded history - more about denying culpability, and attempting to shore up a position which was pretty much a dogshit-coated candy from day one. Grow some fucking balls and just give us the plain fact: you were wrong because you didn't do your job to any standard worthy of someone who proclaims themselves a 'journalist'.
Re:This is really bad news for me. (Score:3, Informative)
It's not as uncommon as it sounds, and it has more appliances than just a "bet on the future stock value". Companies do it to have a determined price to expect (this is especially true for puts/calls on foreign currencies) for a future business. Say, you need 20k USD in 2 months but want to be sure to get them for a certain price, no matter how the market develops (ok, not so terribly important for the USD, despite its nosedive currently, but if you're dealing in RUB or CNY you might want to have a reliable exchange rate), you find someone who agrees to sell you those 20k USD in 2 months for a predetermined rate. Your business partner's problem might be the reverse, he gets 20k USD in 2 months and needs to have a reliable rate, too. Many publically listed companies actually have that problem. For them, such a trade is actually a kind of insurance that, no matter how the rates really develop, they know today whether they can make the deal or not. During my time at a bank I've seen options that spanned a few years for amounts that made my head spin, funny enough it was sometimes even in currencies that are no longer in existance (it was around 2002, when the EU adopted the Euro. It's kinda interesting to see BEF/DEM options floating about in 2003 which don't really make sense from a common sense point of view, both currencies having been replaced by the EUR and had a fixed exchange rate).
Generally though, to get back on (or off) topic, you need someone who agrees to this deal. And usually what's needed to get someone to agree, especially if it's pretty much a given that the price will drop, is to fork over some money. Then it's a "bet" between the seller and buyer on how much it will drop. A little example:
SCO shares cost 1 buck today. You expect them to fall, and you think they should be around 10 cents in 2 months. So you'd want to sell short (i.e. make a put opt). Someone else thinks they'll drop, too, but he expects them to be at 50 cents in 2 months. So he'd probably agree to be your partner if you pay him 60 cents for every share you want to short. So, technically, you "sell" them for 40 cents (you get 1 dollar but have to pay 60 cents to your partner), if they drop below 40 cents in 2 months you cash in, if not, your partner has won.
Free options are rare, most of the time one side has to pay the difference to the "expected value". And option trade is something I wouldn't touch, I simply don't know enough about the market to deal with such highly volatile papers.
Re:This is really bad news for me. (Score:3, Informative)
http://en.wikipedia.org/wiki/Short_selling [wikipedia.org]
http://www.investopedia.com/university/shortselling/shortselling1.asp [investopedia.com]
Just for a couple examples.
Re:This is really bad news for me. (Score:4, Informative)
First off there is the price. There is a rule that says that when you short a stock below $5 the margin you have to provide never falls below $5 a share. So to short 100,000 SCOX shares you would need $0.5 million in cash or $1 million in stock. With SCOX at $0.50 you would net a maximum of $50,0000 if you won. But if for whatever reason the markets thought SCO looked like winning the case and the stock spiked to $10 you would be down $1 million.
The second reason to avoid shorting stocks as bad as SCO is that the short interest can keep the stock afloat all on its own. That is known as a short squeeze. I shorted a complete POS stock that was trading at $20. The company had no revenues and had recently done a SCO like idiot move. I bought to cover at $40, the stock hit $100 at the peak. All this despite the fact that they had no business. it took two years for the stock to drop to 50 cents, which is still overpriced.
There are certainly times when a short makes sense. When the technical staf of Cybercash all posted to the IETF mailing lists that their email address would change later that day it was clear that the game was up (public knowledge means its not insider trading). I made $20K on that short which partly covers the $50K I lost on the other.
The usual reason for using a short is to balance out a portfolio, insuring against a drop in the market. Obviously you want to pick a dog or a grossly overvalued stock since those will probably drop furthest and fastest. For example plenty of people recon that Google will remain king of the search engine space. So they put $100K on Google and short $25K on Yahoo. If search booms they make money on Google and loose some on Yahoo. If search crashes they cover part of their losses on Yahoo. Another reason for using shorts is to hedge an option strategy. From time to time it is possible to play arbitrage between the options market and the equity markets.